Manitowoc Company, Inc. (The) (MTW) - Description of business

G eneral Founded in 1902, we are a diversified industrial manufacturer in three
principal markets: Cranes and Related Products (Crane); Foodservice Equipment
(Foodservice) and Marine. We have over a 100-year tradition of providing
high-quality, customer-focused products and support services to our markets
worldwide. For the year ended December 31, 2006 we had net sales of
approximately $2.9 billion. Our Crane business is a global provider of engineered lift solutions,
offering one of the broadest lines of lifting equipment in our industry. We
design, manufacture, market, and support a comprehensive line of crawler
cranes, mobile telescopic cranes, tower cranes, and boom trucks. Our Crane
products are marketed under the Manitowoc, Grove, Potain, National, and Crane
CARE brand names and are used in a wide variety of applications, including
energy, petrochemical and industrial projects, infrastructure development such
as road, bridge and airport construction, commercial and high-rise residential
construction, mining and dredging. On January 3, 2006, we acquired certain assets, rights and
properties of ExacTech, Inc., a supplier of fabrication, machining,
welding, and other services to various parties. Located in Port Washington,
Wisconsin, ExacTech, Inc. (n/k/a Port Washington) provides these services
exclusively to our U.S. based crane manufacturing facilities. Our Foodservice business is a leading broad-line manufacturer of cold
side commercial foodservice products. We design, manufacture and market full
product lines of ice making machines, walk-in and reach-in refrigerators and
freezers, fountain beverage delivery systems and other foodservice
refrigeration products for the lodging, restaurant, healthcare, convenience
store, soft-drink bottling, and institutional foodservice markets. Our
Foodservice products are marketed under the Manitowoc, SerVend, Multiplex,
Kolpak, Harford-Duracool, McCall, McCanns, Koolaire, Flomatic, Kyees, RDI, and
other brand names. On May 26, 2006, we acquired substantially all of the net assets
and business operated by McCanns Engineering & Mfg. Co. and McCanns
de Mexico, S.A. de C.V. (McCanns). Headquartered in Los Angeles, California,
with operations also in Tijuana, Mexico, McCanns is engaged in the design,
manufacture and sale of beverage dispensing equipment primarily used in fast
food restaurants, stadiums, cafeterias and convenience stores. McCanns primary
products are backroom beverage equipment such as carbonators, water boosters
and racks. McCanns also produces accessory components for beverage dispensers
including specialty valves, stands and other stainless steel components. Our Marine segment provides new construction
(commercial/government), ship repair and maintenance services for freshwater and
saltwater vessels from three shipyards on the U.S. Great Lakes. Our Marine
segment serves the Great Lakes maritime market consisting of U.S. and Canadian
fleets, inland waterway operators, and ocean going vessels that transit the
Great Lakes and St. Lawrence Seaways. Our principal
executive offices are located at 2400 South 44 th Street, Manitowoc, Wisconsin 54220. The Manitowoc Company, Inc.  2006 Form 10-K Financial Information About
Business Segments The following
is financial information about the Crane, Foodservice and Marine segments for the
years ended December 31, 2006, 2005 and 2004. The accounting policies of
the segments are the same as those described in the summary of significant
accounting policies of the Notes to the Consolidated Financial Statements
included in Item 8 of this Form 10-K, except that certain expenses
are not allocated to the segments. These unallocated expenses are corporate
overhead, amortization expense of intangible assets with definite lives,
interest expense, and income tax expense. The company evaluates segment
performance based upon profit and loss before the aforementioned expenses. Restructuring
costs separately identified in the Consolidated Statements of Operations are
included as reductions to the respective segments operating earnings for each
year below. Amounts are shown in millions of dollars.

2006

2005

2004

Net sales from continuing operations:

Cranes and Related Products

$

2,235.4

$

1,628.7

$

1,248.5

Foodservice Equipment

415.4

399.6

377.2

Marine

282.5

225.8

219.2

Total

$

2,933.3

$

2,254.1

$

1,844.9

Operating earnings (loss) from continuing
operations:

Crane and Related Products

$

280.6

$

115.5

$

57.0

Foodservice Equipment

56.2

54.9

55.7

Marine

11.3

(9.2

)

16.5

Corporate

(42.4

)

(24.8

)

(21.2

)

Amortization expense

(3.3

)

(3.1

)

(3.1

)

Operating earnings from continuing
operations

$

302.4

$

133.3

$

104.9

Capital expenditures:

Cranes and Related Products

$

51.3

$

32.9

$

24.2

Foodservice Equipment

10.9

16.9

11.8

Marine

3.1

4.1

4.3

Corporate

2.3

1.0

2.9

Total

$

67.6

$

54.9

$

43.2

Total assets:

Crane and Related Products

$

1,572.4

$

1,224.7

$

1,279.7

Foodservice Equipment

340.1

313.2

302.9

Marine

120.9

123.3

110.3

Corporate

186.1

300.6

235.2

Total

$

2,219.5

$

1,961.8

$

1,928.1

The Manitowoc Company, Inc.  2006 Form 10-K Products And Services We sell our products categorized in the following business segments:

New
construction services for commercial, government, and military vessels of all
varieties, including research vessels, ice breakers, ferries, patrol boats,
self-unloading bulk carriers, double-hull tank barges, articulated tug/barges
(AT/B units) and dredges; military vessels; inspection, maintenance and
repair of freshwater and saltwater vessels.

Cranes and Related Products Our Crane segment designs, manufactures and/or distributes a
diversified line of crawler and truck mounted lattice-boom cranes, which we
sell under the Manitowoc name. Our Crane segment also designs and
manufactures a diversified line of top slewing and self erecting tower cranes,
which we sell under the Potain name. We design and manufacture mobile
telescopic cranes which we sell under the Grove name. We also design and
manufacture a comprehensive line of hydraulically powered telescopic and
articulated boom trucks, which we sell under the National brand name. We also
provide crane product parts and services, and crane rebuilding and remanufacturing
services which are delivered under the Crane CARE brand name. In some cases
our products are manufactured for us or distributed for us under strategic
alliances. Our crane products are used in a wide variety of applications
throughout the world, including energy, petrochemical and industrial projects,
infrastructure development such as road, bridge and airport construction,
commercial and high-rise residential construction, mining and dredging. Many
of our customers purchase one or more crane(s) together with several attachments
to permit use of the crane in a broader range of lifting applications and other
operations. Various crane models combined with available options have lifting
capacities up to 1,433 U.S. tons. Lattice-boom
Cranes. Under
the Manitowoc brand name we design, manufacture and distribute lattice-boom
crawler cranes. Lattice-boom cranes consist of a lattice-boom, which is a fabricated,
high-strength steel structure that has four chords and tubular lacings, mounted
on a base which is either crawler or truck mounted. Lattice-boom cranes weigh
less and provide higher lifting capacities than a telescopic boom of similar
length. The lattice-boom cranes are the only category of crane that can pick
and move simultaneously. The lattice-boom sections, together with the crane
base, are transported to and erected at a project site. We currently offer models of lattice-boom cranes with lifting
capacities up to 1,433 U.S. tons, which are used to lift material and
equipment in a wide variety of applications and end markets, including heavy
construction, bridge and highway, duty cycle and infrastructure and energy
related projects. These cranes are also used by the crane rental industry,
which serves all of the above end markets. Lattice-boom crawler cranes may be classified according to their lift
capacity  low capacity and high capacity. Low capacity crawler cranes with 150-U.S.
ton capacity or less are often utilized for general construction and duty cycle
applications. High capacity crawler cranes with greater than 150-ton
capacity are utilized to lift materials in a wide variety of applications and
are often utilized in heavy construction, energy-related, stadium construction,
petrochemical work, and dockside applications. We offer six low-capacity models The Manitowoc Company, Inc.  2006 Form 10-K and eight high-capacity models. We also
manufacture lattice-boom, self erecting truck cranes. These cranes serve the
same markets as our high capacity crawler cranes. They differ from their
crawler counterparts only in that they are mounted on a truck rather than a
crawler and can travel at highway speeds. We also offer our lattice-boom crawler crane customers various
attachments that provide our cranes with greater capacity in terms of height,
movement and lifting. Our principal attachments are: MAX-ER attachment,
luffing jibs, and RINGER ® attachments. The MAX-ER is a trailing, counterweight,
heavy-lift attachment that dramatically improves the reach, capacity and lift
dynamics of the basic crane to which it is mounted. It can be transferred
between cranes of the same model for maximum economy and occupies less space
than competitive heavy-lift systems. A luffing jib is a fabricated structure
similar to, but smaller than, a lattice-boom. Mounted at the tip of a
lattice-boom, a luffing jib easily adjusts its angle of operation permitting
one crane with a luffing jib to make lifts at additional locations on the
project site. It can be transferred between cranes of the same model to
maximize utilization. A RINGER attachment is a high-capacity lift attachment
that distributes load reactions over a large area to minimize ground-bearing
pressure. It can also be more economical than transporting and setting up a
larger crane. Tower
Cranes. Under the Potain brand name we design and manufacture
tower cranes utilized primarily in the building and construction industry.
Tower cranes offer the ability to lift and distribute material at the point of
use more quickly and accurately than other types of lifting machinery without
utilizing substantial square footage on the ground. Tower cranes include a
stationary vertical tower and a horizontal jib with a counterweight, which is
placed near the vertical tower. A cable runs through a trolley which is on the
jib, enabling the load to move along the jib. The jib rotates 360 degrees,
thus increasing the cranes work area. Except when using a remote control
device, operators occupy a cabin, located where the jib and tower meet, which
provides superior visibility above the worksite. We offer a complete line of
tower crane products, including top slewing, luffing jib, topless,
self-erecting, and special cranes for dams, harbors and other large building
projects. Top slewing cranes are the most traditional form of tower cranes. Self-erecting
cranes are bottom slewing cranes which have counterweight located at the bottom
of the tower and which are able to be erected, used and dismantled on job sites
without assist cranes. Top slewing
tower cranes have a tower and multi-sectioned horizontal jib. These cranes
rotate from the top of their mast and can increase in height with the project.
Top slewing cranes are transported in separate pieces and assembled at the
construction site in one to three days depending on the height. We offer 37
models of top slewing tower cranes with maximum jib lengths of 85 meters and
lifting capabilities ranging between 40 and 3,600 meter-tons. These cranes are
generally sold to medium to large building and construction groups, as well as
rental companies. Topless tower cranes are a type of top slewing crane and, unlike all
others, have no cathead or jib tie-bars on the top of the mast. The cranes are
utilized primarily when overhead height is constrained or in situations where
several cranes are installed close together. We currently offer 7 models
of topless tower cranes with maximum jib lengths of 75 meters and lifting
capabilities ranging between 90 and 300 meter-tons. Luffing jib tower cranes, which are a type of
top slewing crane, have an angled rather than horizontal jib. Unlike other
tower cranes which have a trolley that controls the lateral movement of the
load, luffing jib cranes move their load by changing the angle of the jib. The
cranes are utilized primarily in urban areas where space is constrained or in
situations where several cranes are installed close together. We currently
offer 7 models of luffing jib tower cranes with maximum jib lengths of
60 meters and lifting capabilities ranging between 90 and 600 meter-tons. Self-erecting tower cranes are mounted on axles or transported on a
low-loader trailer. One line of tower cranes is marked under the name Igo. The
lower segment of the range (Igo cranes up to Igo36) unfolds in four sections,
two for the tower and two for the jib. The smallest of our models unfolds in
less than 8 minutes; larger models erect in a few hours. Self erecting cranes
rotate from the bottom of their mast. We offer 25 models of self erecting
cranes with maximum jib lengths of 50 meters and lifting capacities ranging
between 10 and 120 meter-tons which are utilized primarily in low to medium
rise construction and residential applications. Mobile Telescopic Cranes. Under the Grove
brand name we design and manufacture 35 models of mobile telescopic cranes
utilized primarily in industrial, commercial and construction applications, as
well as in maintenance applications to lift and move material at job sites.
Mobile telescopic cranes consist of a telescopic boom mounted on a wheeled
carrier. Mobile telescopic cranes are similar to lattice-boom cranes in that
they are designed to lift heavy loads using a mobile carrier as a platform, enabling
the crane to move on and around a job site without typically having to re-erect
the crane for each particular job. Additionally, many mobile telescopic cranes
have the ability to drive between sites, and some are permitted on public
roadways. We currently offer the following four types of mobile telescopic
cranes capable of reaching tip heights of 427 feet with lifting capacities up
to 550 tons: (i) rough-terrain, (ii) all-terrain, (iii) truck-mounted,
and (iv) industrial. Rough-terrain cranes are designed to lift materials and equipment on
rough or uneven terrain. These cranes cannot be driven on public roadways, and,
accordingly, must be transported by truck to a work site. We produce, under the
Grove brand name, 10 models of rough-terrain cranes capable of tip heights
of up to 279 feet and maximum load capacities of up to 130 U.S. tons. All-terrain cranes are versatile cranes designed to lift materials and
equipment on rough or uneven terrain and yet are highly maneuverable and
capable of highway speeds. We The Manitowoc Company, Inc.  2006 Form 10-K produce, under the Grove brand name, 14
models of all-terrain cranes capable of tip heights of up to 427 feet and
maximum load capacities of up to 550 tons. Truck-mounted cranes are designed to provide simple set-up and long
reach high capacity booms and are capable of traveling from site to site at
highway speeds. These cranes are suitable for urban and suburban uses. We
produce, under the Grove brand name, 4 models of truck-mounted cranes
capable of tip heights of up to 237 feet and maximum load capacities of up
to 90 U.S. tons. Industrial cranes are designed primarily for
plant maintenance, storage yard and material handling jobs. We distribute,
under the Grove brand name, 8 models of industrial cranes capable of tip
heights of up to 92 feet and maximum load capacities of up to 22 tons.
On January 3, 2007 we acquired from our private label manufacturer
all the rights to manufacture the industrial cranes. Boom Trucks. We
offer our hydraulic and articulated boom truck products under the National
Crane product line. A boom truck is a hydraulically powered telescopic crane or
articulated crane mounted on a truck chassis. Telescopic boom trucks are used
primarily for lifting material on a job site, while articulated boom trucks are
utilized primarily to load and unload truck beds at a job site. We currently offer,
under the National Crane brand name, 15
models of telescoping and 8 models of articulating cranes capable of
reaching maximum heights of 176 feet and lifting capacity up to
40 U.S. tons. Backlog. The
year-end backlog of crane products includes accepted orders that have been
placed on a production schedule that we expect to be shipped and billed during
the next year. Manitowocs backlog of unfilled orders for the Crane segment at December 31,
2006 was $1,534.3 million, as compared with $866.1 million at December 31,
2005. Foodservice Equipment Our Foodservice segment designs, manufactures
and markets commercial ice-cube and flaker machines and storage bins; walk-in
refrigerators and freezers; reach-in refrigerators and freezers; refrigerated
undercounter and food preparation tables; ice/beverage dispensers; post-mix
beverage dispensing valves; cast aluminum cold plates; carbonator tanks;
long-draw beer dispensing systems; compressor racks and modular refrigeration
systems; pumps; valves; and backroom beverage equipment distribution services.
Products are sold under the brand names Manitowoc, SerVend, Multiplex, Kolpak,
Harford-Duracool, McCall, McCanns, Koolaire, Flomatic, Kyees, RDI, and other brand
names. Ice-Cube Machines, Ice Flaker Machines and
Storage Bins. Ice
machines are classified as either self-contained or modular machines and can be
further classified by size, capacity and the type of ice they produce. There
are two basic types of ice made by ice machines: cubes and flakes. Machines
that make ice cubes, the most popular type of machine, are used by the
foodservice industry for drinks, ice displays and salad bars. Flake ice is used
to a great extent in processing applications, such as keeping meats and seafood
fresh, as well as in medical facilities for use in ice packs. Our subsidiary Manitowoc Ice, Inc.
manufactures 26 models of commercial ice machines under the Manitowoc and
Snoball brand names, serving the foodservice, convenience store, healthcare,
restaurant and lodging markets. Our ice machines make ice in cube and flake
form, and range in daily production capacities from 45 to 2,150 pounds. The
ice-cube machines are either self-contained units, which make and store ice, or
modular units, which make, but do not store ice. We offer the worlds only commercial
ice making machines with patented cleaning and sanitizing technology. This
feature eliminates the downtime and labor costs associated with periodic
cleaning of the water distribution system. Majority of the units feature
patented technology with environmentally friendly hydrofluorocarbon
refrigerants. We also manufacture the patented QuietQube ice-cube machines,
which feature CVD, or cool vapor defrost, technology, operate heat-free, are
75% quieter than non-CVD units and produce more ice in a smaller footprint.
These QuietQube machines are ideally suited for use in new restaurants, which
often feature more open designs, and for use with the self-service beverage
systems increasingly found in quick service restaurants and convenience stores.
Our ice machines are sold throughout North America, Europe and Asia. Walk-in Refrigerators and Freezers. We
manufacture under the brand names Kolpak and Harford-Duracool. Products include
modular and fully assembled walk-in refrigerators, coolers and freezers for
restaurants, institutions, commissaries and convenience stores. Walk-in
refrigerators and freezers are large, insulated storage spaces fitted with refrigeration
systems. Most walk-ins are custom-made from modular insulated panels
constructed with steel or aluminum exteriors and foamed-in-place urethane
insulation. Refrigerator/blower units are installed in order to maintain an
even temperature throughout the refrigerated space. Walk-ins come in many
models with various types of doors, interior shelving, and viewing windows. We
also produce a complete line of express or pre-assembled walk-ins. Reach-in Refrigerators and Freezers. Reach-in
refrigerators and freezers are typically constructed from stainless steel and
have a thick layer of insulation in the walls, doors and floor. The cabinets
have one to three doors, made of either glass or steel, and come in a variety
of sizes with storage capabilities up to 72 cubic feet. Although
reach-ins resembles household refrigerators, commercial versions utilize few plastic
parts, incorporate larger compressor units and do not usually combine
refrigerator and freezer compartments in the same unit. These design features
stem from the heavy duty usage needs of most reach-ins by customers. For
example, in contrast to the typical household refrigerator, commercial
reach-ins may be opened and closed hundreds of times per day, placing mechanical
strain on the structure and greatly increasing the cooling load on The Manitowoc Company, Inc.  2006 Form 10-K the refrigeration system. We market these products under our McCall,
Kolpak, and Koolaire brand names. We offer over 60 self-contained upright and
under-counter refrigeration equipment units, including a full line of reach-ins
and refrigerated food preparation equipment for restaurants, institutions and
commissaries. We also manufacture custom-built units for select national chains
restaurants. Beverage
Dispensers and Other Products. Our
subsidiary Manitowoc Beverage Equipment, Inc. produces, beverage
dispensers, ice/beverage dispensers, post-mix dispensing valves and cast
aluminum cold plates and related equipment for use by quick service
restaurants, convenience stores, bottling operations, movie theaters, and the
soft-drink industry. Ice/beverage dispensers include traditional combination
ice/beverage dispensers, drop-in dispensers and electric countertop units.
Dispensing systems are manufactured for the dispensing of soda, juice, water,
beer and other specialty drinks. Soda systems include remote systems that
produce cold carbonated water and chill incoming water and syrup prior to
delivery to dispensing towers. Beer systems offer technically advanced remote beer delivery systems
which are superior by design, allow increased yields, provide better under-bar
space utilization and allow multiple stations to operate from one central unit. Our subsidiary Manitowoc Beverage Systems, Inc., or MBS, is a
systems integrator with nationwide distribution of beverage dispensing and
backroom equipment and support system components. MBS serves the needs of major
beverage and bottler customers, restaurants, convenience stores and other
outlets and provides our customers with one point of contact for their beverage
dispenser and backroom equipment needs. It operates throughout the United
States, with locations in Ohio, California, and Virginia. On May 26, 2006, we acquired
substantially all of the net assets and business operated by McCanns. Headquartered
in Los Angeles, California, and with a manufacturing location in Tijuana,
Mexico, McCanns is engaged in the design, manufacture and sale of beverage
dispensing equipment primarily used in fast food restaurants, stadiums,
cafeterias and convenience stores. McCanns primary products are backroom
beverage equipment such as carbonators, water boosters and racks. McCanns also
produces accessory components for beverage dispensers including specialty
valves, stands and other stainless steel components. Backlog. The
backlog for unfilled orders for our Foodservice segment at December 31,
2006 and 2005 was not significant because orders are generally filled within 24
to 48 hours. Marine We operate three shipyards located in Marinette, Wisconsin; Sturgeon
Bay, Wisconsin; and Cleveland, Ohio. Marinette,
Wisconsin. Marinette Marine Corporation
(Marinette) was founded along the Menominee River in Marinette, Wisconsin in
1942 to meet Americas growing need for naval construction. Since its first
contract to build five wooden barges, Marinette has built more than 1,300
vessels. Marinette is a full service shipyard with in-house capabilities to
design and construct the most complex military and commercial vessels. The Marinette facility has 300,000 square feet
of heated indoor production area, 53,000 square feet of secure indoor warehouse
and receiving area, a 4,500 long ton certified ship launch ways and a 1,600 ton
ship transport system. These features of the Marinette facility allow the
vessels to be constructed and outfitted completely indoors. When ready for
launching, they are moved outdoors. Typically, vessels are significantly
material and labor complete when launched which allows for high quality of
finished product and greater manufacturing efficiency. Sturgeon
Bay, Wisconsin. Located in Sturgeon Bay,
Wisconsin, Bay Shipbuilding Co. (Sturgeon Bay) is an industry leader in the
construction of Oil Pollution Act (OPA) 90 double-hulled tank vessels,
articulated tug and barge (AT/B) units, dredges, and dredging support
equipment, along with bulk cargo self unloading solutions. This shipyard
specializes in large ship construction projects and repair work. Our Sturgeon
Bay shipyard consists of approximately 55 acres of waterfront property,
approximately 295,000 square feet of enclosed manufacturing and
office space, a 140-foot by 1,158-foot graving dock, a 250-foot
graving dock, and a 600-foot, 7,000-ton, floating dry dock. Cleveland,
Ohio. Cleveland Shiprepair Company specializes in
all types of voyage and topside marine repair. Backlog The year-end
backlog for our Marine segment includes new project work to be completed over a
series of years and repair and maintenance work presently scheduled which will
be completed in the next year. At December 31, 2006, the backlog for our
Marine segment approximated $422 million, compared to $152 million one year
ago. The backlog is primarily made up of new vessel construction projects and
does not include options for additional vessels, yet to be awarded. Raw Materials and Supplies The primary raw materials that we use are structural and rolled steel,
aluminum, and copper, which is purchased from various domestic and
international sources. We also purchase engines and electrical equipment and
other semi- and fully-processed materials. Our policy is to maintain, wherever
possible, alternate sources of supply for our important materials and parts. We
maintain inventories of steel and other purchased material. We have been successful
in our goal to maintain alternative sources of raw materials and supplies, and
therefore are not dependent on a single source for any particular raw material
or supply. Patents, Trademarks, and Licenses We hold numerous patents pertaining to our crane and foodservice
products, and have presently pending applications for additional patents in the
United States and foreign countries. In addition, we have various registered
and The Manitowoc Company, Inc.  2006 Form 10-K unregistered trademarks and licenses that are of material importance to
our business and believe our ownership of this intellectual property is
adequately protected in customary fashions under applicable law. No single
patent, trademark or license is critical to our overall business. Seasonality Typically, the second and third quarters
represent our best quarters for our consolidated financial results. In our
Crane segment, summer represents the main construction season. Customers
require new machines, parts, and service during that season. Since the summer
brings warmer weather, there is also an increase in the use and replacement of
ice machines, as well as new construction and remodeling within the foodservice
industry. As a result, distributors build inventories during the second quarter
for the increased demand. More recently, due to the strengthening end markets
for our Crane segment, the traditional seasonality has been slightly muted due
to strong cyclical demand, as well as more diversified product and geographic
end markets. In our Marine segment, the Great Lakes shipping industrys sailing
season is normally April through December. Thus, barring any emergency
grounding, the majority of repair and maintenance work is performed during the
winter months and the work is typically completed during the first and second
quarter of the year. As a result our overall increase in new construction
project work in our Marine segment, the seasonality of our traditional repair
and maintenance work is less extreme as new construction projects are performed
throughout the year. Competition We sell all of
our products in highly competitive industries. We compete in each of our
industries based on product design, quality of products and aftermarket support
services, product performance, maintenance costs, and price. Our competitors
may have greater financial, marketing, manufacturing or distribution resources
than we do. We believe that we benefit from the following competitive
advantages: a strong brand name, a reputation for quality products and aftermarket
support services, an established network of global distributors, broad product
line offerings in the markets we serve, and a commitment to engineering design
and product innovation. However, we cannot be certain that our products and
services will continue to compete successfully with our competitors or that we
will be able to retain our customer base or improve or maintain our profit
margins on sales to our customers. The following table sets forth our primary
competitors in each of our business segments:

Engineering, Research and Development Our extensive engineering, research and development capabilities have
been key drivers of our success. We engage in research and development
activities at all of our significant manufacturing facilities. We have a staff
of engineers and technicians on three continents that are responsible for improving
existing products and developing new products. We incurred research and
development expenditures of $31.2 million in 2006, $26.0 million in
2005 and $21.4 million in 2004. Our team of engineers focuses on developing
innovative, high performance, low maintenance products that are intended to
create significant brand loyalty among customers. Design engineers work closely
with our manufacturing and marketing staff, enabling us to identify quickly
changing end-user requirements, implement new technologies and effectively
introduce product innovations. Close, carefully managed relationships with
dealers, distributors and end users help us identify their needs, not only for
products, but for the service and support that is The Manitowoc Company, Inc.  2006 Form 10-K critical to
their profitable operations. As part of our ongoing commitment to provide
superior products, we intend to continue our efforts to design products that
meet evolving customer demands and reduce the period from product conception to
product introduction. Employee Relations We employ approximately 9,500 persons and
have labor agreements with 12 union locals in North America. In addition, a
large majority of our European employees belong to European trade unions. There
were no work stoppages during 2006, 2005 or 2004, however, the following
work stoppages occurred during 2003 and 2002: · At our Manitowoc Crane
Facility for 4 days during November of 2003 by the Local International
Association of Machinists. · At our Marinette Marine facility
for 44 days beginning January 21, 2003, by the local boilermakers union. · At our Bay Shipbuilding facility for 5 days
during February of 2002 by the local boilermakers, electrical workers,
pipefitters, and carpenters unions. In 2007, one collective bargaining contract expires at Marinette Marine
Corporation. We believe that we have satisfactory relations with our union and,
therefore, anticipate reaching a new agreement on satisfactory terms when the
existing agreement expires. Available Information Our Internet address is www.manitowoc.com. Where we make available,
free of charge, our annual report on Form 10-K, quarterly reports on
Form 10-Q, current reports on Form 8-K and any amendments
to those reports, as soon as reasonably practicable after we electronically
file such material with, or furnish it to, the Securities and Exchange
Commission (SEC). Our SEC reports can be accessed through the investor
relations section of our website. The information found on our website is
not part of this or any other report we file with or furnish to the SEC. The public may read and copy any materials that we file with the SEC at
the SECs Public Reference Room located at 100 F Street NE, Washington, DC
20549. The public may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains electronic versions of our reports on its website at www.sec.gov. Geographic Areas Net sales from
continuing operations and long-lived asset information by geographic area as of
and for the years ended December 31 are as follows: